FOR IMMEDIATE RELEASE: Tuesday, May 28, 2013
FOR MORE INFORMATION:
Kristi Barnes Kristi@alignny.org 212.701.9469 office 718.755.5136 cell
Andy Reynolds Andy@cejbuffalo.org (716) 892-5877 office (716) 830-8793 cell
New York’s Economic Development Efforts Amount to $7 Billion Wager
New Report Surveys and Rates Largest Economic Development Programs
With Announcement of a New Economic Development Program, Advocates Offer Recommendations for Reform
New York, NY—ALIGN and the Getting Our Money’s Worth coalition released a new report today, which analyzes data from dozens of economic development programs, and, for the first time, examines in detail often unseen and uncounted state and local spending.
Dozens of leaders and members of union, community, environmental, good government and other advocacy groups gathered at the State Capitol to summarize findings from the new report.
The $7 Billion Wager: New York’s Costly Gamble in Economic Development analyzes New York State’s 15 largest programs, and identifies key problems in each program and the system as a whole. It also takes a closer look at the ten most expensive subsidies in each program. The report outlines recommendations to improve the performance, accountability and transparency of New York’s subsidy programs, and calls on the State to ensure job creation programs actually create the jobs New Yorkers need.
The briefing came on the heels of an announcement last week by Governor Andrew Cuomo of a new economic development program, Tax-Free NY. Advocates pointed to new programs, such as Regional Economic Development Councils, which have been created in recent years, as well as the proliferation of over 40 new Local Development Corporations. Speakers addressed the recent creation and expansion of economic development programs and outlined how the new Tax-Free NY can avoid the pitfalls of current programs.
“New Yorkers need our job creation programs to actually create jobs,” said Matt Ryan, Executive Director of ALIGN. “It is currently too difficult to see how our money is being spent, and whether it is having any impact. Billions of public dollars are spent each year on what amounts to a gamble, not an investment. For any new program to succeed, it would need to set smart goals, and include strong transparency and accountability measures from the start.”
The report finds that few programs require recipients of subsidies to set performance goals such as job creation; few require project-specific reporting or monitor the success of projects; and few allow for adequate public review or recourse when corporations fail to live up to their agreements. At a cost of approximately $7 billion a year, it is nearly impossible for the public or policymakers to determine if this substantial investment in economic development is working for New York.
“New York’s leaders are making a sizeable commitment of taxpayer resources to a myriad of questionable economic development programs,” said Carol Kellermann, Executive Director of the Citizen’s Budget Commission. “Better accountability is needed to help ensure that these resources are used wisely.”
The report found that only three of 15 programs establish performance goals that are annually benchmarked and monitored. Twelve programs either do not establish performance goals, do not establish annual benchmarks, or do so for only some of their subsidies. While ostensibly intended for job creation, the vast majority of programs do not require the creation of a single job.
“$7 billion is a lot of money to squander at a time when so many working people are struggling just to meet the basics,” said Jennifer Diagostino, Executive Director of the Buffalo-based Coalition for Economic Justice. “It’s time to use this money for economic development programs that prioritize good jobs and protect local jobs in our communities.”
No major program in the economic development system, aside from some of New York State Energy Research and Development Authority (NYSERDA)’s programs, monitors or attempts to address carbon emissions. Although climate change is a major concern throughout the state, New York does not monitor how economic development initiatives are contributing to, or helping mitigate climate change.
According to Erin Heaney of the Clean Air Coalition, “Today’s economic development system must be responsive to New York’s current climate challenges. All economic development programs should establish clear benchmarks for environmental sustainability, and programs should prioritize making safe, healthy communities and workplaces.”
The report rated the largest programs in terms of performance, as well as accountability and transparency. It identified only three programs that require clawback provisions for nearly every subsidy recipient. Clawbacks allow public money to be recaptured when corporations fail to live up to their agreements. Only four programs have company-specific and publicly-available annual reporting.
“Practically every community in the state can point to a subsidized project that has fallen far short of its job creation goals,” said Charlene Obernauer, Executive Director of Long Island Jobs with Justice. “New York needs to hold corporations accountable and deliver a money-back guarantee to taxpayers.”
Included in the report were several recommendations to improve the outcomes of the current economic development system. Speakers at the briefing emphasized that very basic reforms aimed at streamlining and establishing a baseline to evaluate performance must be implemented system-wide.
“At a time when state and local governments are cutting the services that New Yorkers depend on, we simply cannot afford to sacrifice our tax base in return for a promise of jobs that fails to materialize,” said Mario Cilento, President of the New York State AFL-CIO. “When businesses accept our tax dollars, they also accept an inherent obligation to deliver for the public, not just their own bottom lines. Troublingly, this report reveals that there is inconsistent and insufficient transparency and accountability built into the vast array of economic development schemes operating throughout our State. Working men and women and all New Yorkers deserve better.”
The $7 billion cost was calculated by analyzing responses to information requests made under the New York Freedom of Information Law (FOIL), and reviewing annual audits, annual reports, investigative reports and state oversight publications.
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ALIGN: The Alliance for a Greater New York’s mission is to create good jobs, vibrant communities and an accountable democracy for all New Yorkers. Our work unites worker, community, and other allies to build a more just and sustainable New York. ALIGN was formed in April 2011 through the merger of New York Jobs and Justice and Urban Agenda. Visit www.ALIGNny.org for more information.
The Getting Our Money’s Worth Coalition is a broad coalition of public policy experts, government watchdogs, labor unions, community and religious organizations, and concerned small business owners, workers and taxpayers. The statewide coalition is anchored by ALIGN: The Alliance for a Greater New York, the Buffalo-based Coalition for Economic Justice and Long Island Jobs with Justice.